Will federal pay freeze rear its head again?

By
Jack Moore

Andrew Biggs, resident scholar, American Enterprise Insitute

With the House postponing a vote on
extending the federal pay freeze, feds are back on course to get a slight pay
increase in March — for the first time in two years.

But Andrew Biggs, a resident scholar at the conservative American Enterprise Institute and an
expert on public-sector compensation, says that the pressing budget issues the
government faces means the issue of federal pay probably isn't going anywhere.

Last month, Rep. Ron DeSantis (R-Fla.), introduced a bill that would have blocked the 0.5
percent pay raise for federal employees mandated by President Barack Obama. Amid
the larger effort to increase the debt limit, House leadership tabled DeSantis'
proposal.

But Biggs said even if the DeSantis bill remains sidelined, he wouldn't be
surprised if a pay freeze extension emerges as part of a broader deficit deal
between the White House and House Republicans.

"There are a lot of other issues going on," he said in an interview on Federal News Radio's In Depth with Francis Rose show. "President Obama didn't agree to a pay freeze for federal employees because he wanted to do it. He did it as a negotiating chip in a much broader discussion of budget options."

Pay debate revisited

DeSantis' bill — like nearly all legislative proposals dealing with the
federal pay freeze — reignited the longstanding debate about how federal pay
stacks up to private-sector salaries.

In October, the Federal Salary Council reported that federal
employees earned, on average, 34 percent less than their private-sector
counterparts.

But AEI has sought to rebut claims that federal workers are underpaid. In a June
2011 analysis prepared by
Biggs, the conservative think tank found federal workers on average earned 14
percent more than private-sector employees.

"So I think there's consensus among economists, at least, the people who are
really looking at these issues that certainly at the very least federal employees
are not underpaid," Biggs said.

However, the Government Accountability Office last July said nearly every study
measuring public vs. private pay used different methodologies, making it
difficult, if not impossible, to compare them.

Fair share or more to sacrifice?

Biggs said determining whether feds are overpaid or underpaid helps determine how
to "share the pain" when making hard budget decisions.

"You don't want to see this happen to federal employees, but at the same time it's
a function of the larger budget problems and the larger weak economy that we have
right now," he said.

At the same time, private-sector workers have also seen layoffs and pay cuts,
Biggs said.

Federal-employee unions maintain federal employees have already paid their fair
share toward deficit reduction. They estimate the two-year pay freeze has netted the government $88
billion in savings, while a separate measure requiring newly hired feds to
contribute more toward their pensions is expected to save the government $15
billion.

"A more than two-year pay freeze, constant threats of government shutdowns and
furloughs, working with fewer resources because of budget cuts-these are things
that federal employees live with every day. ... No other group has been singled
out this way," Colleen Kelley, president of the National Treasury Employees Union
wrote in a recent letter to lawmakers urging a "no" vote on
DeSantis bill.

Biggs said he understands the unions are doing their jobs by representing federal employees but that he doesn't believe feds have suffered larger pay cuts than private-sector workers, who were hit particularly hard in the early days of the recession.

"I don't think you can make a strong argument that federal employees have been
singled out and treated worse," Biggs said, citing low unemployment among federal
workers and federal health and retiree benefits.

"A lot of private-sector workers would be very envious of that," he said.